Taxation of International Artistes and Community Law

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Taxation of International Artistes and Community
Law

• European Commission
• franco.roccatagliata_at_ec.europa.eu
• Seminar on social security and taxation in the
  context of mobility in the live performance
  sector

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Questions for the Panel on  International
Artiste Taxation 
1) What is changing after the ECJ case
rulings (Gerritse 2003, Scorpio 2006) for
artist taxation? 2) Whats the situation across
Europe? 3) What has improved for the live
performance sector and which areas are still a
problem? 4) How can Europe respond better to
the principles of freedom of movement of persons
and services?
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• What  Europe  can do (and/or is doing) to
  remove fiscal obstacles for artistes using the
  Internal Markets freedoms?
• OUTLINE
• EC Law and Taxation General Remarks on the
  limits of the positive integration
• The EC Treaty Freedoms and the negative
  integration
• The EU Cross-border Citizens and Their Rights

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1. EC Law and TaxationGeneral Remarks

• The limits of the positive EC
  action/integration
• A. Legal Constraints
• (1) Legal basis Direct Taxation is only
  indirectly taken in account by the EC Treaty
• Art. 93 ECT The Council shall adopt provisions
  for the harmonisation of legislation concerning
  turnover taxes, excise duties and other forms of
  indirect taxation
• Art.94 ECT The Council shall issue
  directives for the approximation of such laws,
  regulations or administrative provisions of the
  Member States as directly affect the
  establishment or functioning of the common
  market.

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1. EC Law and TaxationGeneral Remarks

• The limits of the positive EC
  action/integration
• A. Legal Constraints
• (2) Double Taxation Article 293 ECT does not
  oblige Member States to eliminate double taxation
• Art. 293 ECT Member States shall, so far as is
  necessary, enter into negotiations with each
  other with a view to securing for the benefit of
  their nationals the abolition of double
  taxation within the Community
• Article 293 is not intended to lay down a
  legal rule directly applicable as such, but
  merely defines a number of matters on which the
  Member States are to enter into negotiations with
  each other far as is necessary. it is clear
  from the wording of that provision that it cannot
  itself confer on individuals any rights on which
  they might be able to rely before their national
  courts. (ECJ, C-14/96, Gilly, para. 14-17)

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1. EC Law and TaxationGeneral Remarks

• The limits of the positive EC
  action/integration
• B. Political/Legal Constraints
• (1) The need for unanimity among European
  Union members over tax matters.
• Article 94 ECT The Council shall, acting
  unanimously on a proposal from the Commission and
  after consulting the European Parliament and the
  Economic and Social Committee, issue directives
  for the approximation of laws .

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1. EC Law and TaxationGeneral Remarks

• The limits of the positive EC
  action/integration
• B. Political/Legal Constraints
• (2) Fiscal sovereignty of MSs (subsidiarity).
• Article 5 ECT In areas which do not fall within
  its exclusive competence, the Community shall
  take action, in accordance with the principle of
  subsidiarity, only if and in so far as the
  objectives of the proposed action cannot be
  sufficiently achieved by the Member States .
• as Community law stands at present, direct
  taxation does not as such fall within the purview
  of the Community ECJ, C-279/93, Schumacker,
  para.21 C-290/04, Scorpio, 30)
• direct taxation falls within the competence
  of the Member States (ECJ, C-345/04, Centro
  Equestre, para 19)

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2.The EC Treaty Freedoms

• The negative integration
• the role of the ECJ
• Member States remain competent to determine the
  criteria for taxation, however their tax
  provisions must be compatible with EC Law.
• the powers retained by the Member States
  must nevertheless be exercised consistently with
  Community law
• ( ECJ, C-279/93, Schumacker, para.21 C-290/04,
  Scorpio, 30 )

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2.The EC Treaty Freedoms

• Tax Treaties are not an exception to the rule.
  Like other tax provisions, tax conventions must
  not contravene the requirements of EC law
• Irrespective of its extent, the difference in
  tax treatment resulting from the application of
  that tax convention constitutes
  discrimination which is incompatible with the
  freedom of establishment guaranteed by the Treaty
  
• ( ECJ, C-170/05, Denkavit France, para.49 )

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2.The EC Treaty Freedoms

• Member States may take their inspiration from
  OECD Model (e.g. Article 17 on taxation of
  artistes) but their provisions are not
  necessarily compatible with EC Law
• the fact that the rules are consistent with
  the provisions of the OECD model convention does
  not also mean that they comply with Article 43
  EC. Neither the provisions nor the objectives of
  the OECD model convention, on the one hand, or of
  the EC Treaty, on the other, are in fact the
  same.
• ( A.G. Micho, C-324/00, Lankhorst-Hohorst,
  para.79 )

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3. The EU Cross-border Citizens and Their Rights

• The role of the European Commission
• as policy maker
• the coordination of national tax policies
• (to transform the negative integration into a
  positive, constructive action)
• as guardian of the Treaty (Art. 211 ECT)
• the infringement procedures
• (main aim of an infringement action is to remedy
  breach of Community law)
• No direct access for tax payer to the ECJ
• Art. 226 ECT Infringement procedure (Commission)
• Art. 234 ECT Preliminary ruling (national courts)

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Direct tax cases decided by/pending before the
ECJ (by year of reference to the Court
31/12/2008)
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Direct taxation new infringements per year
(31/12/07)
3. The EU Cross-border Citizens and Their Rights

• Year Complaints Own initiative Total
• 2001 17 1 18
• 2002 34 5 39
• 2003 28 10 38
• 2004 (EU 25) 35 2 37
• 2005 47 23 70
• 2006 50 16 66
• 2007 (EU 27) 65 32 97

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Complaints about the taxation of non-resident
3. The EU Cross-border Citizens and Their Rights

• 1) Different collection mechanism
• 2) Different tax base (gross versus net)
• 3) Different tax rates

For press releases in respect of infringement
cases http//ec.europa.eu/taxation_customs/comm
on/infringements/infringement_cases/index_en.htm (
See, e.g. IP/09/292 IP/09/291 IP/08/1533
IP/08/144 )
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Complaints Who and how?
3. The EU Cross-border Citizens and Their Rights

• Anyone, free of charge
• Against any measure or practice by a Member State
  incompatible with EU law
• Complainant does not have to
• demonstrate a formal interest or
• be directly concerned by the alleged infringement
• Complainants are not a party to the infringement
  proceedings they must safeguard their rights at
  national level
• In writing, by letter, fax or e-mail (any EU
  language)

For more information EC Infringement-Website
http//ec.europa.eu/community_law/infringements/i
nfringements_en.htm
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Thank You For Your Attention !!
Arnoud Gerritse the free movement of musical
notes(Source http//eddywestveer.blogspot.com)